System breakdown

Fresh from nine hours of training and toting a thick notebook labeled “CMS,” for Common Management System, one Chico State University technician was trying to think positively about the computer data system that was supposed to revolutionize the way California State University campuses kept track of money, employees and students.

The first time she sat down at the computer to write a purchase order, she became jaded. “I only had to purchase one item,” she said. “It took me two and one-half hours.”

The technician, who asked that her name not be used, is among many Chico State staff members who felt vindicated when, at the behest of the state Legislature, the independent, nonpartisan state Auditor’s Office examined CMS and found a wide range of problems with it and the CSU’s management of it.

The premise for the system, the selection process, the security of private information, the lack of any kind of cost-benefit analysis, and potential financial conflicts of interest among key staff members and CMS vendor PeopleSoft drew sharp criticism in the 179-page report, released March 11. Taxpayers are forking out $662 million—more than enough to run Chico State University for six years—for a system that that, due to what auditors called “weak efforts” in the early planning stage, the CSU can’t even prove it needed in the first place.

“We’ve been calling for an audit for a long time,” said Pat Gantt, chief steward for the Chico State chapter of the California State Employees Association, who works in the Biological Sciences Department. But now that the audit is out, Gantt is in no mood to gloat. “The audit results validate our concerns. But it’s sad. No one takes pleasure in this. It’s really an unfortunate situation.”

State Sen. Richard Alarcên, D-San Fernando Valley, who was among those asking for an audit a year ago, stated last week in a press release that CMS is a “waste” of funds that could be going to serve students. “Before they cut [student programs] they need to cut money from this project.”

Legislators also called for the Attorney General’s Office to investigate possible criminal charges against two CSU officials whom the audit identified as having the appearance of conflicts of interest.

CMS is costing Chico State $2.7 million a year at a time when budget cuts threaten everything from faculty jobs to student graduation dates. The California Faculty Association (CFA) has calculated that the money being spent on CMS equates to 14,000 class sections systemwide.

Meanwhile, CSU officials are bafflingly upbeat about the audit results.

The audit is “pretty inflammatory,” agreed CSU Spokesperson Colleen Bentley-Adler, but the CSU appreciates and agrees with most of the auditors’ recommendations. It’s the findings with which the Chancellor’s Office has a problem.

CMS is not $312 million over budget, Bentley-Adler said. The auditors made it look that way because “they’re putting in everything associated with this over a nine-year period,” as if someone were adding five years’ worth of gasoline to the purchase price of a car.

“It’s true we did not do what you would call a formal cost-benefit analysis,” Bentley-Adler said. “We determined there was really only one way to go. We knew there was only one option.”

Elaine Howle, California’s state auditor, said she doesn’t see how the Chancellor’s Office could put such a positive spin on it.

“I wouldn’t consider the report a positive audit report,” she said. “I would consider it a critical audit report.

“We go in with no preconceived notions,” Howle said. But even the numbers-oriented auditors, who investigated with a budget of $185,000, found a long list of things that never would have passed muster in private industry. “We had concerns about the management of the project. The university [system] hadn’t put together a strong business case before embarking on such a large project—standard practice in any kind of project management.”

There was no feasibility study and no systemwide funding plan. Few concrete goals were set, so there was no way to gauge progress. “There really wasn’t a lot of planning, from our view,” Howle said.

CMS was supposed to be the answer to antiquated software that varied widely from campus to campus. The CSU anticipated that vendors would soon stop supporting old systems and the costs to maintain the software would increase. CMS would replace old financial reporting, human resources and student administration systems with an efficient, cost-effective new setup that would allow a host of new conveniences and information-sharing among campuses.

“The university is not achieving the maximum functionality from a systemwide implementation,” the audit stated.

One goal the CSU did state early on but now denies was key to the plan was being able to compile and access information systemwide. “It’s not really accomplishing that goal,” Howle said. Only two of the 23 CSUs share a database, and the individual campuses have modified the software so much—at least 200 modifications altogether—that someone at the Chancellor’s Office or another campus usually can’t call up another campus’ data. The audit also blasted the CSU for not keeping track of the time and cost for making the modifications.

Anonymous employees interviewed by the CN&R say it’s not a learning curve or fear of change that makes them feel frustrated by the CMS. The system is time-consuming, involves much more data entry than prior programs and takes time away from more student-centered work. Above all, it’s not user-friendly.

“It’s a very complex, cumbersome system. Nothing’s self-explanatory. We have had to learn so many new things, it’s like starting a new job,” says one department secretary and 12-year Chico State employee. “It means I’m backlogged with work, and for the first time I have people on me to get stuff done. I know a lot of people who have retired because of this. If I could, I would.”

Three staff members told the CN&R they save up purchase orders, order from Office Depot’s easier online system, use petty cash or ask people in the department to hold off buying things so they won’t have to deal with the program.

Another department secretary said she keeps a set of books on the side because “for months and months we couldn’t even see a report of anything we had bought or traveled. I was so frustrated, because I figured if I could just see the product I could understand the process.

“A lot of people here are very dedicated to the students,” she said. “How does this make this place better? How are we helping students get through this university?”

The CSU initially planned for the system to be voluntary, but ultimately it forced all campuses to adopt it—a directive that leaves some at Chico State wondering if local administrators truly believe in CMS or are just following orders.

The CSU now says it never intended to save money with CMS, other than by maintaining software and data in an $8-million-a-year center in Utah.

If CMS were saving money, the CSU might not even know it: The chancellor is making campuses pay for the system out of their budgets, and, “in a striking lapse, the university lacked actual and projected campus cost information for the project when we began our review,” the audit stated.

The auditors also called the way PeopleSoft—with its $37 million contract for software licensing, training and consulting services—was selected “problematic.” Because the CSU didn’t use a “fair and objective competitive process” in choosing PeopleSoft, it didn’t necessarily get the best-value vendor. And the CSU could have saved a lot of money by contracting with PeopleSoft and other consultants on a per-job or per-goal basis rather than hourly.

The auditors looked at many Form 700s, documents submitted to the Fair Political Practices Commission (FPPC) by employees who have business relationships with outside companies.

“We didn’t conclude that there was a definite conflict of interest, but there was evidence to show that there is an appearance of conflict of interest,” Howle said. The auditors suggested ethics training.

Auditors highlighted one case, that of the CSU’s assistant vice chancellor of Information Technology Services, David Ernst. He participated in the procurement process when the CSU decided to go with PeopleSoft. But he had also been paid $11,000 a month by PeopleSoft to “facilitate meetings” for the company. The relationship concerned auditors so much that it referred Ernst’s case to the FPPC, Howle said.

Another assistant vice chancellor’s husband bought stock in Dell the day before it became publicly known that the CSU would sign a large contract with that company.

Bentley-Adler says Ernst disclosed his relationship in Form 700s and excused himself from meetings when the final PeopleSoft decision was being made. As for the other employee, Lenore Rozner, “it was pure coincidence that her husband happened to buy stocks the day before that was made public.”

Last week, security concerns identified in the audit—users could easily access Social Security numbers—prompted the Chancellor’s Office to issue a statement promising that it would tighten controls on access to CMS. Now, employees, who already sign a confidentiality agreement, must have preapproval from the campus president or vice president to access “sensitive identifiers.”

At Chico State, Vice Provost for Information Resources Bill Post said, “The implementation is coming along very well. We’ve been on time and under budget all along.” Post said he knows the staff is overworked. “This is a huge software project. It will take another five years for this to settle in.”

Post said Chico State has saved a lot of money by being self-sufficient in training its own staff to do the work for which other campuses would have hired consultants. “That’s been a real rewarding strategy,” he said. “We may be the only campus in the first module without consultants on campus lately. We’d rather spend it on our people locally than give it to consultants.”

Chico State has spent $775,915 on consultants, including $25,000 for PeopleSoft consultants, less than that spent by several other campuses.

“It is expensive, there’s no doubt about it,” Post said. But he agrees that Chico State’s old systems couldn’t clunk along forever. “For us, we had to do something anyway. … We are running on very old hardware on a software system that is not going to be supported much longer.”

At a hearing scheduled for April 3, CFA planned to ask the Joint Legislative Audit Committee to postpone implementation of CMS.

“It’s a mess. It’s a devastating indictment,” said Beau Grosscup, the president of the Chico State chapter of CFA. “The audit clearly said there was never any substantiation for the need.”

Jimmy Reed is president of the Associated Students, which has formally resolved not to pay into CMS as ordered by the university. Last week, he objected when A.S. staff members inserted $25,000 a year in future budgets in case the university forces the issue. He’s optimistic the Chancellor’s Office will allow campuses to slow down implementation. “The perception of CMS has changed dramatically,” Reed assessed. “If they slow down, maybe they won’t have to cut as many places as suggested.”

Contrary to rumors, CMS is not exempt from budget cuts, the Chancellor’s Office confirmed. “We’re taking the same reduction as the colleges,” Post said: 5 to 7 percent.

Post said that at Chico State it would be possible to slow down the implementation of the final module, student administration, stretching the implementation period from 20 to 30 months to save money.

Gantt said a coalition of unions is hoping to come up with an “exit strategy” from CMS. “How do you correct this midstream?” he said. “Some kind of centralized or common management system makes sense. We never objected to that.”

The CSU has 60 days to formally respond to the audit. After that will come a series of three progress reports. The Legislature will get a copy of the audit and decide what action, if any, should be taken.

Although Chancellor Charles Reed’s response to the state auditor came across as grateful for the suggestions, he was less measured when asked about CMS detractors during a visit to Chico State earlier this school year: People who are against CMS, he said, either fear change or "felt that we could take a dollar and put that into compensation."